Question

Accounting 301 -Fall 2019 - Test 2 (Mark your answers on this booklet) s. The accounting records of Rockness Company provided the data below (5 in 00s). 3,300 2,000 Net income $25,200 Depreciation and amortization expense Gain on sale of long-term asset 1,000 Decrease in accounts receivable Increase in inventory 4,500 Increase in salaries payable Decrease in interest payable 400 Required: Prepare a reconciliation of net income to net cash flows from operating activities. (12 POINTS) Show calculations! 900 Net Income 525,200 Page 13 of Spurrier Accounting 301 - Fall 2019 - Test 2

Answer 1

Rockness Company
Cash flow from operating activities – Indirect method
For the current year ended December 31, 2012
	Amount ($)	Amount ($)
Cash flows from operating activities;
Net Income		25,200
Adjustments to reconcile net income to Net cash provided by operating activities
Add: Depreciation & amortization expenses	3,300
Less: Gain on sale of long-term assets	-1,000
Add: Decrease in accounts receivables	2,000
Less: Increase in inventory	-4,500
Add: Increase in salaries payable	900
Less: Decrease in interest payable	-400	300
Net cash provided by operating activities		$25,500